The real estate market is one of the most reliable investments that you will ever make. More fortunes have been made with real estate than in any other way. Property will always have value which is why real estate has been so profitable. That isn’t to say that there is no risk to investing in real estate just that the risks are different than they are for other investments. These differences are a big part of the reason that so few people choose to invest their money in real estate.
The primary reason that most people choose to invest in things other than real estate is that real estate is very expensive. Unlike stocks that allow you to purchase a small piece of company it isn’t really practical to purchase just a small piece of a house, it can be done but it isn’t easy.
There are mutual funds available that invest in real estate but these aren’t very common. The way most investors get around this problem is to borrow money in order to buy a property and then rent out the property to cover the costs of borrowing. While this works it can be a real hassle.
The other major problem that people have when they invest in real estate is that real estate isn’t the kind of investment that can be bought and left to increase in value. If you own a property you are going to have to spend a great deal of time looking after that property.
If you choose to rent it out you are going to have to be a landlord that means you need to find tenants, collect the rent every month and maintain the property. Even if you don’t rent out the property you are going to have to maintain the property and this can be a major job. There are companies that will do it for you but they will cost quite a bit of money.
Another issue with owning property as an investment is that you will have to pay property taxes. Like all other investments you will need to pay a capital gains tax on any money you make out of your investment but unlike virtually any other investment you will need to pay an additional tax every year. In addition in a lot of places you will also have to pay a sales tax when you buy a property, something you don’t have to do on most other investments.
Despite all of the negatives involved in owning real estate it is still one of the best investment options available. The reason is simple the price of real estate just keeps rising. Sure there are occasional bumpy periods where the value declines but over the long haul almost all properties increase significantly in value. That is something that you can’t say about to many other investment options. The cost may make it difficult to own property but if you can you definitely should.